Author: SavedbyGrace
April 7, 2008
| Asking Price | $775,000 | ::: | Sq-ft | 1,452 |
| Purchased Price | $343,000 | ::: | Lot Size | 9,000 |
| Purchased Date | 10/13/2000 | ::: | Beds | 2 |
| Days on Redfin | 2 | ::: | Baths | 1.75 |
| $/Sq-ft | $534 | ::: | Year Built | 1948 |
| 20% Downpayment | $155,000 | ::: | Area | Peacock Village |
| Income Required | $193,750/yr | ::: | Type | SFR |
| Est. Payment* | $3,918/month | ::: | MLS# | A08049960 |
*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%
Last week we profiled a short sale on this same street for $699k. It’s also a 2bed/1.75 bath single family residence with similar square footage; that makes it a direct comparison to today’s profiled property which is asking for a 10% premium. The sellers aren’t offering anything extra over this comp for the extra $76k and shows how they are still ignoring the market forces.
Purchase Price $343,000
Purchase Date 10/13/2000
Loan $185,000
Downpayment $158,000
These homeowners had a substantial downpayment when they purchased the property before the boom and don’t appear to be flippers, but that doesn’t negate the fact that their house is way over priced. At $534/sq-ft, it’s more expensive than most homes in Arcadia. The structure is clearly dated with no renovations or updates whatsoever. I don’t know about you, but I need more than just fresh paint and new carpet to win me over for a property.
With a 2 bedroom house around the corner renting for just $1,695/month, this property has a GRM of 457! It was purchased less than 8 years ago for just $343k. At 3 and 4 percent annual appreciation/inflation, this property would be worth $434,502 and $594,646 respectively. All things considered, I don’t understand how they can price it at $775k and realistically expect to get a sale at this price. If they do, they should feel really lucky to have found a sucker to bail them out.
RE: Income Required: $193,750/yr
$200K/yr to afford this! The market is still out of control. I don’t understand who the buyers of these homes are? This looks like a low end home that you need a high end income to afford.
Affordability is still wildly out of control! If I made $200k/yr, that’s not the house I’d picture myself buying. I don’t need a mansion, but that’s a starter home to me.
I went to the open house yesterday on this property. The traffic was low, and I do not think it can be sold at this price range. Low to middle 600K probably reflects the market. That means the listing price is at least 18% above the market value! Either greed seller or lousy agent.
My family and I visited a 1940′s 3 bd, 1 ba in Temple City yesterday renting for just over $1900. The place did have its charms and the neighborhood looked nice admittedly but with with no heat in the master bedrooms, a bathroom that was barely fitting the tub and a kitchen that guaranteed waltzing to avoid collisions we’ve decided to slum it in Pasadena for basically the same price.
The market is still very much out of control in some areas. No seller wants to face the seriousness of the situation right now. It may be sooner or later but the truth comes out eventually.
SavedByGrace,
Could you please clarify how a GRM is calculated? I read the following at about.realestate.com and I’m not sure if I’m understanding the GRM tool. I saw that you divided the one-month rental payment figure from the asking price. The About article on the other hand divides the total annual income from the property value.
From About:
“Getting the GRM for recent sold properties:
Market Value / Annual Gross Income = Gross Rent Multiplier (GRM)
Property sold for $750,000 / $110,000 Annual Income = GRM of 6.82
Estimating value of property based on GRM:
Let’s say that you did an analysis of recent comparable sold properties and found that, like the one above, their GRM’s averaged around 6.75. Now you want to approximate the value of the property being considered for purchase. You know that its gross rental income is $68,000 annually.
GRM X Annual Income = Market Value
6.75 X $68,000 = $459,000
If it’s listed for sale at $695,000, you might not want to waste more time in looking at it for purchase.”
Tracker,
I wrote about that briefly here http://www.arcadiahousingblog.com/2008/02/15/to-buy-or-not-to-buy/
The comparable listing and examples from Redfin and Craigslist may not be up on the web anymore, but that’s okay. Some people like to use the annual values (which is what you listed above) and others prefer to just use the monthly numbers. Either way, it’s just an estimate and should be treated as such.
Sometimes its hard to find recent sales that are comparable to the property you’re considering, but if it costs significantly more to buy than to rent, then it’s just common sense.
[...] This listing caught my eye because it’s a new price point in the beautiful Lower Rancho area also known as Peacock Village. This is the first decent looking single-family residence that I’ve seen under $750,000 in a long time. It’s a nice house and has better curb appeal than the slightly bigger, but more expensive listing on 716 Joaquin Road. [...]